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The Irish Independent reports that
the Government is to force banks to increase the number of deals they do with
mortgage borrowers who find themselves in genuine distress.

The six main banks -- AIB, EBS, Bank of Ireland/ICS, Permanent TSB, Ulster
Bank and KBC Bank -- will be given common targets for dealing with mortgage
arrears.

Banks yesterday met the Central Bank and the Cabinet was briefed about the
new strategy, details of which are revealed for the first time by the Irish
Independent.

Taoiseach Enda Kenny is set to outline at a press conference today that:

- Banks will have to offer deals that last years -- rather than just putting
those behind with their payments on the likes of interest-only deals for a few
months.

- The deals will include split mortgages and long-term, interest-only deals
for those in serious arrears.

- But there will be no debt write-offs, informed sources have indicated --
the mortgage will have to be repaid in full.

The main lenders will target homeowners they feel are deliberately
withholding mortgage payments under the new Government strategy.

The banks could get back powers within days to threaten repossessions of
residential and buy-to-let investors who they suspect are not paying their
mortgages even though they can.

A High Court decision in 2011 and various Central Bank rules on mortgage
arrears have convinced some people that they cannot lose their homes.

As a result, Department of Finance and Central Bank officials fear money that
could be used to pay mortgages is being diverted to pay other bills.

As part of the deal to give banks back the power to threaten repossessions,
the lenders will be forced to start offering thousands of distressed homeowners
more long-term deals. But no mortgage debt will be written off.

If the banks have not shown that they have met the new target of
restructuring at least 20,000 mortgages a month, they will be forced to put
aside extra capital, as new rules on provisions will be introduced in 2014.

The strict rules in the mortgage arrears code, operated by the
Central Bank, will be changed to help banks move against those who are
deliberately not engaging with lenders.

This will include relaxing the limit on the number of unannounced
contacts banks can make each month with those who won't engage with them.

Separately, banks also had the plans outlined to them in the
Central Bank.

One of those who has been briefed said: "The Government is not
forcing the banks to write down one cent of mortgage debt.

"Instead, people in mortgage trouble will be offered to have half
of the debt parked, or the term of the mortgage will be elongated, or the
interest rate will be reduced.

"But the full burden of the debt will stay on people's backs."

Some 186,000 residential mortgage-holders are either in some form
of arrears or have had a short-term deal – such as interest-only repayments
– put in place with the agreement of the bank.

Another 50,000 borrowers with buy-to-let mortgages are in trouble.

Fewer than 80,000 residential mortgages have been restructured, but
half have ended up back in arrears.

Department of Finance and Central Bank officials fear many people
are strategically defaulting.

Professor of Finance at NUI Maynooth, Gregory Connor, recently
estimated that up to a third of mortgage-holders who are in arrears are
deliberately not paying. This works out at close to 40,000 residential and buy-to-let
mortgage-holders who can meet their payments but are choosing not to.

They may be using the money to pay other bills.

Insolvency

However, Prof Connor's figure is considered too high by state
officials.

Some experts briefed yesterday feel the push to get banks to offer
split mortgages and lower interest rates to those in mortgage distress is an
attempt to stem the numbers seeking personal insolvency deals.

The new personal insolvency process is due to be up and running by
the summer, allowing people to have debt written off.

Up to 25,000 people are expected to avail of the insolvency
procedures in the first 12 months of the new service.

But bankers fear they will eat up any spare reserves they have if
too many people seek debt deals under the new rules.

David Hall of the Irish Mortgage Holders Organisation said the key
question was how to define a mortgage restructure.

"Is it putting someone on interest-only? If so, the banks will meet
their targets in four months," he said.

The Irish Independent also reports that public servants earning less than €100,000-a-year who face a pay cut under
the new Croke Park deal will have their wages restored in three years.

But
those earning over €100,000 face a permanent reduction in their salaries.

A new Department of Public Expenditure and Reform document outlines how
the pay cuts will hit "high earners".

Those earning between €65,000 and €100,000 will take the pay cut of over
5.5pc for three years. But they will eventually get back on their current
salary scale when the deal runs out.

In contrast, those earning over €100,000 – including assistant secretary
generals in government departments – will not see their pay restored,
because their pay increments will be permanently reduced by the pay cut. The
pay cut ranges from 5.5pc on the first €80,000 of earnings, to 10pc on
amounts over €185,000.

As well as pay cuts for higher earners, the new deal will mean reductions
in overtime and premium pay, and an increase in working hours, if ratified
by state employees.

Meanwhile, four unions opposing the deal said it is not acceptable that
other unions should be voting on pay cuts for their staff.

"This would be an unprecedented development in Irish trade union history
and one that no union member should accept," said the unions.

They are the Irish Nurses and Midwives Organisation, the Irish Medical
Organisation, the Civil, Public and Services Union, and UNITE.

They claimed the proposals to extend the Croke Park deal will unfairly
penalise women and workers on low incomes.

Protest

The unions said the deal also means there can be involuntary redundancies
for the first time in a national agreement, due to "draconian" new
redeployment measures.

However, the largest public sector union, IMPACT, insisted that
compulsory redundancies are not in the deal.

The four unions, who are calling for a 'no' vote on the deal, expect up
to 1,000 people to attend a meeting in protest at the proposals in Cork City
Hall tomorrow. The meeting is the first in a nationwide campaign against the
proposals.

Meanwhile, the Civil, Public and Services Union will begin
balloting on the deal today.

The union yesterday overwhelmingly endorsed its negotiators'
decision to walk out of the Croke Park talks last month.

SIPTU meets tomorrow to decide whether it will recommend the
deal to members, after IMPACT and the Public Service Executive Union (PSEU)
recommended a 'yes' vote.

The result of the ballot of all 19 public service unions on the
proposed agreement will be revealed on Wednesday, April 17.

If accepted, the Government plans to roll out the payroll cuts
from July 1.

The Irish Times reports that
energy group ESB today reported profits of €194 million for last year, saying it
intended to pay a €78 million dividend to the exchequer.
In its annual report, ESB said it had invested €765 million in infrastructure
projects during 2012 .

The investments included a €466 million upgrade of Ireland ’s transmission and
distribution network designed to accommodate increases in wind generation and
maintain the resilience of the network.

During the year, ESB said it raised €1.1 billion through the issue of bonds,
predominantly to European investors, which will support its ongoing
infrastructure investment programme.

A total of ¤600 million in project finance facilities were raised to fund the
construction of Carrington power station in the UK.

The company also noted that two prominent credit rating agencies Standard &
Poors and Fitch had both recently upgraded their outlook rating for the ESB from
negative to stable.

Electric Ireland, ESB’s energy retail business, returned to profitability last
year while customer numbers have increased by 80,000 between electricity and
gas.

ESB chairman Lochlann Quinn said a financially strong ESB could ensure
“continued investment in important infrastructure in Ireland.”

Chief executive Pat O'Doherty said: “Many of our customers are experiencing
considerable hardship and we continue to work sensitively with them to help them
manage their bills, there was a reduction of 33 per cent in disconnections over
the last two years.”

“The group business strategy positions ESB as Ireland’s foremost energy company
competing successfully in the converging Ireland/Great Britain electricity
market,” he said.

The Irish Times also reports that
Minister for Finance Michael Noonan has directed Bank of Ireland, AIB and
Permanent TSB to reduce their staff remuneration costs by 6 to 8 per cent to aid
their return to profitability.

The reductions are to be introduced by cuts in payroll and pension benefits, and
new working arrangements and structures to deliver efficiency gains. The banks
will be expected to begin delivering the cost reductions in 2014.

This direction comes on foot of a report on bankers pay for the Government by
consultants Mercer.

Mr Noonan said the remuneration cuts were “essential” for the banks to achieve a
”return to profitability” and “repay the State’s investment through a return to
private ownership”.

He said “other options and measures” would be introduced by the Government to
achieve the cost reductions in the event that the banks do not effect the
savings that are being sought.

The report shows that salary levels at Irish banks are behind European averages
for most grades. Since 2008, total remuneration at Bank of Ireland, AIB and PTSB
fell by 6 to 11 per cent but rose by 1 per cent at Irish Bank Resolution
Corporation, which largely reflects a premium paid to staff of that bank to
compensate for the fact that it was in wind up mode prior to its liquidation by
the Government on February 7th.

The Irish Examiner reports that the ISME Quarterly Bank
Watch Survey found that 52% of applications are being refused by the banks and
that, even when loans are granted, it takes an average of five weeks to secure a
decision from the bank.

ISME called on the Central Bank to investigate the length of time it is taking
for businesses to get a lending decision.

ISME chief executive Mark Fielding said the results of the survey showed that
the banks were not working in their own interest and were killing the economy.

“The results of this survey demonstrate, quite categorically, that the banking
system for SMEs is not working, despite the vulgar and misleading advertising by
the bailed-out banks,” Mr Fielding said.

“While it may suit the administration to believe the bankers’ fiction, the truth
of the matter is that banks are deleveraging through curtailing SME lending,
thereby sabotaging the economic recovery through pure self-interest.”

The survey of more than 1,000 companies found that 95% stated that the
Government was having either a negative impact or no impact on SME lending.

Mr Fielding said the Government cannot continue to leave banks to draw up their
own codes to help provide businesses with funding.

“The experiment of ‘leaving the banks to their own devices’ and expecting
voluntary codes to solve the problems must now cease,” he said.

“Government must take a much more hands-on approach or bankers will continue to
distort statistics, delay reform and feel free to terrorise small and medium
businesses, in their never-ending drive to maximise their own profits.”

However, a spokesperson for AIB said that the bank was already lending above the
rate that the Government had targeted.

“AIB approved €4.8bn in SME lending in 2012, 37% ahead of the Government target
of €3.5bn. AIB’s SME Government lending target for 2013 is €4bn,” the
spokesperson said.

“In November 2012, AIB launched an initiative allowing SME loans of up to
€25,000 to be decided within 48 hours at branch level.”

Mr Fielding described the banks behaviour as being like Jekyll and Hyde. “Credit
lines are being restricted, deadlines missed, decisions delayed, while the banks
themselves continue their Jekyll and Hyde act of ‘open for business’ while
refusing more than half of all genuine SME credit applications,” he said.

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